The grid frequency is the means by which supply and demand of electricity is balanced within a power grid or transmission network. The power grid will typically operate at a nominally fixed voltage and frequency, although the latter will almost certainly vary between upper and lower statutory limits defined in the various standards and grid codes. Such grid frequency variations result from power imbalances within the overall network—a rising frequency indicates an excess of generated power and may be caused by a fall in demand, and a falling frequency may be caused by a shortfall of generated power or a power station trip, for example.
Transmission system operators (TSOs) will try to maintain the grid frequency at the nominally fixed (or target) frequency by contracting or purchasing frequency response reserves. Positive reserve is often referred to as ‘headroom’ and negative reserve is often referred to as ‘footroom’. Both can be provided by service providers that provide frequency support by regulating the amount of power that they supply into the power grid or take out of the power grid (i.e. reduce their power consumption) either automatically in response to changes in the grid frequency or on receipt of instructions from the TSO. For example, the TSO may contract an electricity generating company to maintain headroom so that additional power can be supplied into the power grid almost instantaneously in the event of a fall in supply frequency.
In most cases the service provider is compensated through holding payments that are proportional to the amount of headroom and/or footroom that they maintain:Revenue (£)=Headroom (MW)×Low Frequency Holding Payment (£/MW/Hr)×Time (hr)and/orRevenue (£)=Footroom (MW)×High Frequency Holding Payment (£/MW/Hr)×Time (hr).
The effectiveness of this frequency response arrangement between the TSO and the service providers means that the grid frequency rarely deviates far from the target frequency. As a result, service providers rarely have to provide the full headroom and/or footroom that they are contracted to maintain even though they continue to receive the holding payments for doing so.